Do You Have To Register Your Business?

It is entirely legal to start a business and operate as a sole proprietorship under your own name without registering a legal entity for your company

  • Keep in mind, however, that doing so does not provide you with any form of legal protection if you experience debt or face legal action. You also cannot legally use any business name other than your own name until you have registered it as an officially recognized business entity, both with your local state authorities and with the Internal Revenue Service. There are also certain types of regulated businesses that cannot be operated without a business entity.
  • Becoming recognized as a business by the Internal Revenue Service does not require any special steps or documents. All you need for IRS recognition is to file your first business tax return, as required by federal law.
  • If you plan to grow your business beyond just yourself, and therefore have payroll, you do need to register your business with your state, procure required tax identification status in any states in which you have full-time W2 employees, and apply for and receive an Employer Identification Number (EIN) from the Federal Government.

Can You Use Your Company's Name If It Hasn't Been Registered?

If you have not registered your business with your state’s Secretary of State, you can only do business in your own name. If you do offer a product or service in exchange for any kind of payment and you have not registered, you automatically become a sole proprietorship.

The next step from a sole proprietorship is a Limited Liability Company, otherwise known as LLCs. LLCs have become a popular business structure due to their:

  • Flexibility
  • Simplicity of ownership and setup
  • Limited liability protection for LLC members

Many business owners choose to register their new companies as LLCs because it limits their personal liability, but it's actually not a requirement to do so to conduct business in most cases.

Check Trademarks Before Doing Business Under Another Business Name

Before you do business under a name other than your own, you should check trademarks with the U.S. Patent and Trademark Office (USPTO) to ensure that you are not infringing upon an already registered trademark and thus could be served a cease-and-desist letter and forced to change your business’s name.

If your brand name does infringe on another entity’s trademark, you do not have to change your entity’s business name, however. You simply need to do business under a different name, also called a Doing Business As, or DBA. When you do this, instead of simply writing Business A LLC, you would write Business A LLC DBA Business B, where Business A is your LLB’s entity name and Business B is your brand name.

How to Register Your Business

There are a few steps you'll need to complete to successfully register your business:

  1. Choose a business structure
  2. Register with the appropriate local and federal authorities
  3. Obtain required licenses and permits

Choose A Business Structure

limited liability company is just one of several business structures that you, as a new business owner, have to choose from when setting up your new company. The LLC structure is not always the best fit for every new company, so it’s important to know which might be the right fit for you. 

Other business structure types include:

Each structure has its own benefits and drawbacks in areas such as:

  • Liability protection
  • Documentation requirements
  • Taxation

It's a good idea to get help from a lawyer that has knowledge and experience pertaining to business as well as a certified public accountant when deciding which business structure to adopt. A lawyer can help make sure the choice you make provides optimal benefits in terms of limited liability protection and tax benefits while keeping operational costs as low as possible. 

Forming certain types of business entities provide you with the ability to keep your business and personal assets separate and protect you and your family from the negative effects of things like:

  • Legal action
  • Bankruptcy
  • Any other issues pertaining to financial difficulties that your business might face

Certain business structures, such as partnerships, S- and C-corps, and LLCs, will help to:

  • Establish that you are the first person to use your chosen business name
  • Prevent another company from using the same name in the state you operate in

Some business structures, most notably a C-corp, will also enable you to obtain funding from sources such as:

  • Angel investors
  • Venture capitalists
  • Banks
  • The Small Business Administration (SBA)

Most capital sources are hesitant to entertain presentations by business owners who have not registered their company as an officially recognized business. 

If you have come up with a great name for your business, you're going to want to start using it as soon as possible as the central focus of your branding and marketing efforts. However, this isn't an option until you have taken steps to register your company with the appropriate authorities in your state.

Register With the Appropriate Local and Federal Authorities

Before conducting business, make sure that you have registered with the appropriate local and federal authorities.

For local businesses, this may mean obtaining local permits required to open and run a business from a physical location.

For federal authorities, it may be things like alcohol distribution permits, radio or TV licenses, or licenses required for companies that sell firearms, ammunition, or explosives.

As always, check your local state as well as federal requirements for your specific type and category of business.

Obtain Required Licenses and Permits

Some businesses, especially local and regulated businesses, may be required to obtain a license or permits before conducting business.

Businesses in regulated industries, such as legal, finance, or real estate, are required to be licensed and registered before conducting business in each state.

Other businesses, like a local business with a physical location, may need to obtain a business license that they are required to display publicly before and while conducting business from that location.

Consult with a lawyer if you are unsure what licenses, permits, or registration your business requires in your state.

Need Advice on Registering A New Business?

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